CFPB Accuses Citigroup of Discriminatory Practices Against Armenian-American Customers

The Consumer Financial Protection Bureau (CFPB) has issued an order against Citigroup, accusing the bank of engaging in discriminatory practices against Armenian-American customers when applying for credit cards.

Discriminatory Behavior

According to the CFPB’s findings, Citigroup employees were trained to avoid approving applications with last names ending in “yan” or “ian”, which are common suffixes to Armenian surnames. Additionally, applicants originating from Glendale, California, where a significant portion of Armenia’s Armenian-American population resides, were also targeted.

The bank’s employees referred to Armenian-Americans as “bad guys” and believed they were more likely to commit fraud due to their heritage. The CFPB found that these biases led to unfair treatment and denial of credit card applications.

Fines and Remedies

As a result of the discriminatory behavior, Citigroup has been fined $24.5 million. Additionally, the bank must pay an extra $1.4 million in remedies to impacted customers.

Citigroup’s Response

In response to the allegations, Citigroup claimed that the discriminatory behavior was an attempt to stop potential fraud, citing a “well-documented Armenian fraud ring operating in certain parts of California”. However, the CFPB investigation revealed that employees used identifiable information to broadly discriminate against Armenian-Americans in general.

“We sincerely apologize to any applicant who was evaluated unfairly by the small number of employees who circumvented our fraud detection protocols,” Citigroup said in a statement. “Following an internal investigation, we have taken appropriate actions with those directly involved in this matter and we promptly put in place measures to prevent any recurrence of such conduct.”

CFPB’s Order

The CFPB’s order stated that Citigroup stereotyped Armenians as prone to crime and fraud, and illegally fabricated documents to cover up its discrimination. The case involves hundreds of individuals who were impacted by the bank’s discriminatory behavior.

Regulatory Issues

This is not the first time Citigroup has faced regulatory issues. Under CEO Jane Fraser, the bank has been trying to overhaul its risk-management business, but regulators continue to express concerns about how Citi manages its sprawling and complex business.

“I am concerned about Citi’s longstanding problems when it comes to managing the many parts of its business,” said Rohit Chopra, director of the CFPB.